What does the FRB have to do with securities accounts?
The Federal Reserve Board regulates the extension of credit to consumers. In the case of a cash securities account, the FRB sets forth the requirements for securities payments in section 220.08 of Regulation T: http://www.federalreserve.gov/regulations/default.htm Regulation T is based on the FRB’s belief that a customer who sells securities before having the cash to pay for them is engaging in a credit transaction, essentially borrowing money to invest. This type of transaction is properly done in a margin account. In addition, the FRB posts Legal Interpretations of Regulation T that describe how the Regulation is applied at http://www.federalreserve.gov/boarddocs/legalint/ under margin requirements.
